Practice Areas

Insurance Bad Faith

“Insurance Bad Faith” describes a claim that an insured may have against its insurance company based on its wrongful refusal to pay policy benefits. Under the law of most jurisdictions in the United States, insurance companies owe a “duty of good faith and fair dealing,” which means that claims must be handled promptly and fairly, and may not be denied unreasonably.

If the insurance company violates this duty, the insured may sue the company for damages for breach of contract and in tort for breach of the implied covenant of good faith and fair dealing. The contract/tort distinction is significant because, as a matter of public policy, attorney’s fees, damages for emotional distress, and punitive damages are not available in contract claims, but may be recovered in tort. The result is that an insured may be able to recover damages in excess of the face value of the policy.